ME full-year results: profit up 29% to $74.7 million

Wednesday 28 September 2016

Industry super fund-owned bank ME has reported an underlying net profit after tax of $74.7 million for FY2016, a rise of 29% on the previous reporting period.

The increase was driven largely by a 6% increase in total assets to $24.7 billion combined with stable net interest margin of 1.55%.

ME CEO, Jamie McPhee, said the Bank has maintained a strong growth path over the last four years with the NPAT increasing by an annual compound growth rate of 32% since 2012.

“Growth has been achieved by improving systems and processes, increased brand awareness and digital capability, and a deeper relationship with our industry super fund partners.

“We are meeting our financial objectives while delivering strong growth which, combined with ongoing investments in brand and technology, are positioning the Bank for even greater growth going forward, ensuring we deliver long-term strategic value and appropriate financial returns to our industry super fund owners.”

In FY16 ME settled over 16,000 new home loans totalling $4.6 billion. The Bank achieved home loan settlements of $2.6 billion in the second half of the year, which was a record for the Bank and ensures strong momentum heading into FY17.

The Bank’s Member Benefits Program, which capitalises on its unique relationship with its industry super fund and union network, grew to a record participation of more than 100 industry super funds and unions, and is now generating over 10% of ME’s home loan settlements.

Cost-to-income ratio continued to fall, reducing 270 points to 65.8%. McPhee said there was more work to do but the ratio had continued on its downward trajectory since June 2009 (when the ratio was 84.5%), and will further improve due to productivity gains from the new technology.

Customer numbers grew 8% to 365,520 in FY16 and have increased by a compound annual growth rate of 10% since 2012, while customer deposits grew by 19% to $10.5 billion reflecting the ongoing diversification of ME’s funding profile.

Return on Equity increased by 80 basis points to 8.2%, continuing the trend towards the medium term target of 10%.

The new brand identity and external brand campaign activities across TV, outdoor, radio, online, social media and cinema advertising resulted in a 10 point increase in prompted awareness during the financial year to 50%.

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